Forex Today: Coronavirus surpasses SARS, Trump's impeachment gets interesting, Fed in focus

Yohay Elam FXStreet

Here is what you need to know on Wednesday, January 29:

Coronavirus: The respiratory disease has already infected 5,974 people, surpassing that of SARS in 2003 as the death toll hit 132. The US and Japan have evacuated citizens out of Wuhan and Starbucks closed all its cafes in China. While the news grabs the headlines, the effect on markets is diminishing. USD/JPY is settling above 109 and Gold is below $1,570.

Impeachment trial: Mitch McConnell, the leader of the Republican majority in the Senate, has reportedly admitted that he is unable to stop the summoning of witnesses. Several of his colleagues want to hear what former adviser John Bolton has to say, potentially revealing explosive evidence of undoing by President Donald Trump. Investors may tune in.

Federal Reserve: The world's most powerful central bank is set to leave interest rates unchanged in its first decision of 2020 and after cutting borrowing costs three times in a row. The recent signs of an inversion in the yield curve is one of the topics on the agenda.

See

Fed Preview: Five things that will determine the dollar's direction
Federal Reserve Preview: Stable policy and an uncertain future

US data: Ahead of the Fed, US data has been mixed. While the Conference Board's Consumer Confidence gauge beat expectations with 131.6 points in January, Durable Goods Orders missed on core figures with the nondefense ex-aircraft figure falling by 0.9%.

Australia: Consumer Price Index rose by 0.7% quarterly and 1.8% yearly, both above expectations. Alongside the upbeat jobs report, the chances that the Reserve Bank of Australia cut rates are low.

Cryptocurrencies have been holding onto high ground, with Bitcoin surpassing $9,300 and Ripple above $0.24.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

AUD/USD tumbles amid soaring US yields, ahead of jobs data

The Aussie Dollar stumbles over 1% against the US Dollar on Wednesday as US Treasury yields soar, with the US 5- and 10-year T-note yields surpassing the 5% threshold amid investor confidence in further Federal Reserve tightening. The AUD/USD trades at 0.7039 after peaking at 0.7118.

USD/JPY stands firm near mid-157.00s, close to two-week high

USD/JPY hovers around mid-157.00s in the Asian session on Wednesday, near two-week highs touched last Friday as the BoJ's dovish rate hike continues to undermine the Japanese Yen. Meanwhile, the US Dollar remains firm amid the Fed's hawkish stance, adding support to the pair, though JPY intervention fears cap further gains. Markets pay little heed to the completion of the round of US-Iran indirect talks ahead of Trump-Xi meeting.

Gold falls to weekly troughs below $4,300

Gold rapidly leaves behind two daily upticks in a row and comes under heightened downside pressure midweek. Indeed, the precious metal breaches below the $4,300 mark per troy ounce to reach weekly lows amid the marked recovery in the US Dollar and the generalised upbeat tone in the US money market.

Australia unemployment rate expected to remain unchanged at 4.5% in August

Australia will release the August monthly employment report on Thursday at 01:30 GMT. Ahead of the announcement, analysts expect the country to have added 20K new jobs in the month, while the Unemployment Rate is expected to remain steady at 4.5%. The Australian Bureau of Statistics (ABS) report is also expected to show that the Participation Rate stood at 66.9%, unchanged from the previous month.

Freight costs may reach US shelves after the Fed plans to stop hiking

The Federal Reserve has forecast its main reference rate unchanged through 2027, a year when higher shipping costs are likely still reaching US store prices. Shipping a container from Asia to the US costs more than four times what it did before the war with Iran began in late February. International Monetary Fund research puts the peak effect on shop prices roughly a year out, in 2027.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.